The University of Arkansas System will borrow $5 million from the reserves of its individual campuses to fund the startup of the system's new, online-only college.
In a special telephone meeting Friday, the University of Arkansas board of trustees approved a resolution that would allow the system to borrow the funds in two equal disbursements on March 1, 2015, and March 1, 2016. The board set a term of 10 years on each loan with an annual interest rate of 1.75 percent.
The board voted 8-0 to approve the resolution. Trustee Reynie Rutledge was absent, and Trustee Jane Rogers of Little Rock abstained from voting after voicing her opposition.
Rogers said she is in full support of the UA System's eVersity but "I just cannot find it in my heart or my soul to support borrowing the money from our campuses" unless there is an extreme emergency.
"I just don't think it's the thing to do. Our chancellors have worked hard over the years to build things better. They've taken care of the money. They've been good stewards of the money, and for us to move in and borrow this money from their campuses, I just don't feel like it's right," Rogers said. "I know this is probably overstating it. But I feel once we do this, the door is cracked and there are going to be all sorts of notices coming up over the years."
Trustee Mark Waldrip said he "would be upset, too," if he had the view that the decision would spawn more inter-institutional borrowing. But he doesn't think it will.
"This is in view of our mission to extend an education to the people of the state of Arkansas who otherwise won't have that opportunity. In that context, I view this as the most appropriate use of our system resources. I think it's completely appropriate. Having explored the other alternatives, I recommend it," Waldrip said.
The board faced stiff opposition from chancellors and several others when the interinstitutional loan was first proposed at its Oct. 17 meeting. In the end the original proposal was rescinded and the board voted to allow Waldrip -- as chairman of the Audit and Fiscal Responsibility Committee -- to research other options such as a bank loan and return to the board with a recommendation.
On Thursday afternoon, UA System spokesman Nate Hinkel sent notification of a board meeting Friday and included the new resolution recommending the inter-campus loan. There was no previous notice, however, when the Audit and Fiscal Responsibility Committee convened at the beginning of Friday's board meeting and voted to recommend approval of the proposal.
At the Oct. 17 meeting, G. David Gearhart, chancellor of the University of Arkansas at Fayetteville, said the campus reserves would be compromised because all but $14 million of the $142 million reserve account is already designated for specific departments, projects and plant expenses.
Likewise, University of Arkansas at Little Rock Chancellor Joel Anderson told the board that taking money from the reserves to fund the eVersity would put the metropolitan campus in further financial jeopardy. Declining enrollment is affecting UALR's revenue, he said.
The resolution passed Friday included a breakdown of how much 18 campuses and various system entities will be required to lend.
UA-Fayetteville will lend $749,350 and UALR will lend $182,671 each year for two years. The University of Arkansas at Pine Bluff is to provide two payments at $219,249 each, and the University of Arkansas for Medical Sciences will lend $616,923 from its reserves for two years.
When contacted after the meeting, Anderson said, "We will make the funds available whenever requested."
Rogers told the board that she would still like to see the board explore bank financing for the money.
"If we could do that, borrow the money from the bank, make it all work, then we're not infringing upon the other campuses and our chancellors who have worked hard to make this money," she said.
Earlier Friday, the Arkansas Higher Education Coordinating Board unanimously voted to officially recognize the UA System eVersity. The higher education board will allow the eVersity to offer degree programs through existing University of Arkansas institutions until the eVersity receives independent accreditation.
Michael Moore, the UA System vice president for academic affairs, told the higher education board that classes will begin in the fall of 2015 with full-time faculty members from UA campuses teaching the online courses. Moore said the goal of the eVersity is to be completely self-supporting and never require state funding.
Moore also assured the higher education board that the eVersity has strong support from the chancellors.
A section on 11/01/2014